Naira Weakens Against the Greenback in Most FX Segments…


In the just concluded week, Naira depreciated against the USD in most market segments amid stronger demand relative to supply.

The local currency depreciated by 0.08% to N412.00/USD at the Investors and Exporters FX window despite the rise in external reserves by 0.22% w-o-w to USD33.57 billion as at Thursday, August 26, 2021.

The exchange rate also depreciated at the Bureau De Change and Parallel markets by 0.78% and 0.97% to close at N520.00/USD and N524.00/USD respectively as unmet demand at the official channels faced the alternative market segments.

Meanwhile, NGN/USD rate closed flat at N380.69/USD at the Interbank Foreign Exchange market amid weekly injections of USD210 million by CBN into the forex market: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles.

Elsewhere, the Naira/USD exchange rate fell (Naira appreciated) for most of the foreign exchange forward contracts: Spot rate, 1 month, 2 months, 3 months, 6 months and 12 months contracts declined by 0.11%, 0.19%, 0.27%, 0.69% and 1.34% to close at N411.78/USD, N413.00/USD, N414.39/USD, N418.73/USD and N428.55/USD respectively.

n the new week, we expect the I&E FX rate to trade around current levels.

However we may see sustained exchange rate gap between the the official channels and the parallel market amid growing demand pressure before the foreign currency inflows from Eurobond issuance of USD6.2 billion and the USD3.4 billion SDRs (Special Drawing Rights) from IMF.